ENERGY

First Gen Corporation (First Gen) has the largest portfolio of power plants that use clean, renewable, and indigenous fuels such as steam, water, wind, solar, and natural gas. It has a diversified and flexible portfolio of assets that makes it well-positioned to address the growing demands of intermittent sources of energy as the world transitions to a fully renewable energy future. It owns and operates 30 power plants across Luzon, Visayas, and Mindanao with 3,492 megawatts (MW) of installed capacity. The Company has a strong track record in developing, financing, building, bidding for, and operating power generation projects that have made First Gen into a leading Independent Power Producer (IPP) in the Philippines. The Company continues to forge pathways towards a decarbonized and regenerative future. The Company’s 65%-controlled Energy Development Corporation (EDC) is the largest integrated geothermal company in the world. 

Financial Performance

In 2019, First Gen’s power plants provided the flexibility needed by the national grid during tight reserve situations. As such, the energy company recorded an attributable recurring net income of USD284.4 million (~PHP14.8 billion), a 17.3% increase from USD242.4 million (~PHP12.7 billion) in 2018. 

First Gen’s three baseload natural gas plants – Santa Rita, San Lorenzo, and San Gabriel – continued to operate reliably during critical red and yellow alert periods. The flexibility of the Santa Rita and San Lorenzo power plants to run on liquid fuel helped the grid overcome the restrictions of the Malampaya gas supply. San Gabriel’s full-year revenues from its Power Supply Agreement (PSA) with Meralco was one of the drivers for growth, supported by better performances from FG Hydro and Avion due to higher sales volume and average selling prices in the WESM. The Hydro platform’s revenues increased by 27% to PHP2.4 billion in 2019 from PHP1.9 billion in 2018. FG Hydro’s higher dam elevation led to higher generation, likewise contributing to the revenue growth. 

EDC’s geothermal platform’s revenues grew to PHP36.4 billion, an 11.0% increase from PHP32.8 billion in 2018. The increase can be attributed to the resumption of normalized operations of the Leyte power plants after recovering from damages caused by Typhoon Urduja in 2017. Higher sales from contracts and the Wholesale Electricity Spot Market (WESM) led to higher revenues for Negros and BacMan geothermal plants.

Key Highlights

Natural Gas

San Gabriel’s full-year delivery for its PSA with Meralco allowed First Gen to provide Meralco customers with one of the lowest generation costs in 2019, enabling the company to provide affordable electricity to Meralco customers.

First Gen continues to pioneer efforts in natural gas development through the FGEN Batangas LNG Terminal Project, which is targeting to initiate commercial operations by 2022. In accordance with Executive Order No. 30, the project was declared as an “Energy Project of National Significance” (EPNS), signifying the project’s importance to grid security and its alignment with Department of Energy’s (DOE) policy and energy plan. In March 2020, First Gen submitted its application for a Permit to Construct, Expand, Rehabilitate, and Modify (PCERM) to the DOE. 

In 2019, the total power generation of the First Gen Clean Energy Complex (FGCEC) avoided the emission of 8.6 million tonnes of greenhouse gas emissions (tCO2 e) (vs coal)– equivalent to removing 1.9 million cars from the road for a year. 

Geothermal 

EDC’s geothermal plants collectively produced 7,877.4 GWh in 2019, a 7.3% increase from 7,340.7 GWh in 2018 despite the challenges in steam availability in the Leyte plants. 

Natural disasters posed some challenges to some of EDC’s plants in 2019. Typhoon Tisoy struck the BacMan plant, slightly damaging the Palayan (BacMan 1) switchyard. Minimal damage was recorded in other facilities in the plant due to recent modifications that were made to increase their resiliency against typhoons. Meanwhile, the Leyte plant sustained damages caused by Typhoon Ursula last December 2019. Damages were sustained on the piping of the Leyte Fluid Collection and Recycling System (FCRS), which was immediately repaired. Its cooling tower only sustained minor damages due to its modification. A 6.5-magnitude earthquake also affected the Mt. Apo facility last October 31, damaging Mindanao 1’s main stop valve, some buildings, and access roads. 

Minor repairs were immediately carried out to address minor damages. EDC has benefitted from previous resiliency investments, allowing the facilities to return to service immediately. Hence, the company continues to invest in its resiliency programs to mitigate risks from natural disasters. 

EDC focused on optimizing operations across plants through upgrades and improvements in plant reliability, plant efficiency, and implementation of efficient workstream projects. 

Hydro 

FG Hydro initiated the development of the 100-MW Aya Pumped-Storage Project in Pantabangan, Nueva Ecija. The project is envisioned to be a pioneering variable-speed pumped storage facility in the country. The project is adjacent to the Pantabangan Hydroelectric Power Plant, which is also owned and operated by FG Hydro. It will use the Pantabangan and Masiway reservoirs to store energy during off-peak periods when spot prices are low and generate electricity during peak periods when spot prices are high, as well as provide ancillary services for the security and stability of the national grid. 

Wind

Vestas PowerPlus, a suite of updates for the improvement of wind turbine performance and profitability, was installed in the Burgos Wind Project in December 2019. The installation is expected to improve the energy yield of the Burgos Wind Project’s wind turbines by 1.5 GWh through cut-out wind speeds extension and power curve during operation optimization. 

Solar

Maintenance for the three solar rooftop projects located in Kalibo, Oton, and Passi in Panay Island was transferred in-house from external contractors and was completed in March 2019.

Residential and Commercial Real Estate

Rockwell Land continues to raise the bar by delivering beyond ordinary properties and lifestyle to its discerning clients. A pioneer in developing master-planned residential and commercial spaces, Rockwell Land aims to bring its brand of luxury living to more community developments outside of Metro Manila.

Financial Performance

In 2019, Rockwell Land posted a banner year as its net income after tax reached a record high of PhP3.0 billion, 17% higher than the previous year’s PhP2.6 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA), on the other hand, increased by 15% to PhP6.0 billion from PhP5.2 billion the previous year, while total revenues for the year reached PhP15.7 billion. 

The continued strong demand for Rockwell Land developments propelled its full-year reservation sales in 2019 to PhP16.7 billion, another all-time high. This is mainly driven by Rockwell South at Carmelray, The Proscenium, The Arton by Rockwell, and Aruga Resort and Residences - Mactan. 

Key Highlights

Rockwell Land had four (4) residential launches in 2019, namely: Phase 2 of Terreno South in Batangas, Rockwell South at Carmelray in Laguna, Larsen Tower at The East Bay Residences in Muntinlupa City, and Nara Residences, Rockwell Land’s first project in Bacolod City. These projects contributed 34% of the total reservation sales for the year. 

The Kirov, Sakura, and Lincoln towers of The Proscenium at Rockwell were also completed during the year. In Cebu City, Rockwell Land started handing over units in Buri, the third residential tower of 32 Sanson. 

In 2019, leasing revenues increased by 23% versus last year, mainly due to the full-year impact of new projects completed in 2018. Specifically, the occupancy rate of office spaces increased to 99% in 2019, from 71% in 2018. Additionally, the occupancy rate of our retail spaces also increased to 96% in 2019, from 87% in 2018. 

To further expand its landbank, Rockwell Land acquired 40.8 hectares of land in Bacolod, and another 1.3 hectares of land in Iloilo.

Industrial Real Estate

First Philippine Industrial Park (FPIP) continues to work with its locators in contributing to national development and economic growth. As one of the largest and fastest-growing contiguous industrial parks in the country, FPIP is the preferred location of the world’s largest companies, generating 65,742 local jobs and billions of pesos in annual export earnings. 

Financial Performance

FPIP’s net income after tax reached PhP172 million in 2019, an 11% growth from PhP155 million in 2018, which is primarily driven by higher recurring revenues from leasing ready-built factories (RBF) and higher park charges from its new RBF locators. FPIP’s recurring revenues reached PhP687 million, up from PhP614 million in 2018. A new land lease with machine manufacturer Komatsu helped increase FPIP’s earnings in 2019. 

Key Highlights

In 2019, FPIP and First Industrial Township (FIT) had a total of 145 locators, up from 135 locators in 2018. Our locators include industry giants such as Brother, Canon, Murata, Collins Aerospace, Honda, Philip Morris, and Nestle, among others. Combined, locators have a total of 65,742 employees in 2019, up from 61,990 employees in 2018. 

To accommodate more locators, FPIP increased the leasable area of its RBFs to about 110,000 square meters in 2019, up from 100,000 square meters in 2018. 

FPIP’s RBF leasable area enjoyed a 100% occupancy rate by the end of the year, prompting the construction of two new RBF clusters with a combined leasable area of 30,000 square meters. This will bring FPIP’s RBF footprint to 140,000 square meters in 2020. 

The two (2) new RBF clusters are being built to accommodate solar panel installations. Two (2) existing RBF clusters have also been retrofitted to allow the installation of solar panels, with further plans to modify all remaining RBF clusters to be solar panel-ready

Manufacturing

First Philec, Inc. (FPI) is the pioneer and leader in electrical transformer solutions in the Philippines. FPI is the preferred provider of local power distribution utilities and electrical cooperatives, supplying nearly 60% of the nation’s distribution transformer needs. The First Philec (formerly Philec) brand has been a trusted name for distribution transformers for more than 50 years. 

Financial Performance

FPI ended the year with PhP2.4 billion in revenues, surpassing the previous year’s record performance of PhP2.3 billion by 3%. It is also the seventh consecutive year of continued growth, reflecting a 9% Compound Annual Growth Rate (CAGR), from 2012 to 2019. 

Despite higher revenues, FPI’s net income declined by 11%, from PhP534 million in 2018 to PhP483 million in 2019. The decrease is mainly due to higher income taxes recorded following the expiration of the Income Tax Holiday incentive on its amorphous distribution transformers in the last quarter of 2018. 

Key Highlights

For the past five (5) years, FPI has served over 350 customers. The Company’s strategy stems from providing customers with solutions that have the lowest owning cost, fastest availability, reliable supply, and expert technical services for after-sales support. 

FPI captured nearly 60% of the local transformers market and continues to be the dominant transformers services solutions provider in the country. FPI has been a trusted partner to Meralco, the country’s largest distribution utility, by consistently delivering more than 90% of Meralco’s annual requirements for the past five (5) years. Over the past three (3) years, FPI has been the dominant supplier of distribution transformers to six (6) other private distribution utilities. 

FPI continues to green its supply chain. FPI’s copper wire suppliers have removed plastic from their packaging, and its silicon supplier now uses steel reusable pallets instead of wooden single use pallets. FPI has stopped using forklifts in the shop floor, switching to battery operated-material handling equipment. 

Aside from advocating high-efficiency transformers, FPI also offers clients environment-friendly fluids derived from vegetable oil as an insulating fluid option for their transformers. These oils have a thermal capacity twice as much as mineral oil, which makes the product safer, more durable, and 99% recyclable/biodegradable. 

The manufacturing company also improved its production capacity, with a record-high monthly output exceeding 1,700 units/155,000 kilo-volt-ampere (kVa), beating prior year’s milestone of 1,600 units/140,136 kVa. 

Our non-transformer business grew five (5) times in 2019.

Construction

With 50 years of construction experience, First Balfour, Inc. (First Balfour) continues to participate in nation-building by delivering world-class engineering and construction services to the energy, utilities, transport, and high-value buildings sectors. A Quadruple A contractor, First Balfour has also diversified its businesses to include distinct capabilities in geothermal well drilling and equipment rentals through its wholly-owned subsidiary, ThermaPrime Drilling Corporation, and its Plant and Equipment Division, T1 Rentals, respectively. 

Financial Performance 

First Balfour’s consolidated net income reached PhP290 million in 2019, a 55% increase from 2018. Our construction revenues and the strong performance of its growing rental equipment business, T1 Rentals, largely contributed to the year-on-year increase. 

There was also an increase in the earnings of its drilling subsidiary, ThermaPrime, because of new contracts with the Philippine Geothermal Production Company (PGPC) and with First Gen subsidiary, the Energy Development Corporation (EDC). 

First Balfour generated more business from repeat clients for rehabilitation, upgrade, and maintenance (RUM) projects. As such, its revenues reached PhP6.8 billion, with a healthy order backlog of PHP9.3 billion mostly from these RUM projects. 

Key Highlights

The construction of the 8.5-kilometer Cebu-Cordova Link Expressway (CCLEX) is now 49% completed. Most of the substructures have been completed, while works for the causeway and ramps are currently progressing well. The expressway, which aims to alleviate the traffic congestion between Mactan and Cebu, will be completed by the late 2021. The CCLEX project was awarded by Metro Pacific Tollways Development Corporation to Cebu Link Joint Venture (CLJV) composed of First Balfour, D.M. Consunji Inc., and Spanish company Acciona Construccion S.A. 

The Novaliches-Balara Aqueduct 4 (NBAQ4) Project completed the excavation of the tunnel boring machine (TBM) launching chamber in December 2019. The tunnel boring machine is now under Commonwealth Avenue, Quezon City and the tunneling operations for the 7.3-kilometer long and 3.8-meter diameter underground aqueduct are underway. The project, which aims to deliver bulk water from the La Mesa Dam to Balara, Quezon City, will be completed in 2021. The project was awarded by Manila Water to NovaBala Joint Venture, which is composed of First Balfour, CMC di Ravenna of Italy, and Chun Wo Construction & Engineering of Hong Kong. 

T1 Rentals offers various earth moving, lifting, trucking, and hauling equipment for rent to construction companies, industrial firms, and logistics providers. In 2019, T1 Rentals grew its equipment rental fleet by 24%, to 730 units in 2019 from 590 units in 2018, as it acquired new earth movers, cranes, heavy trucks, and other industrial equipment. 

Sustainability is high on the agenda of First Balfour. Its head office in Sucat, Parañaque City is the first BERDE-certified facility in the Philippines. It has a 100-kilowatt peak (kWp) solar roof deck, which helps bring energy savings of up to 26% annually, and just recently started exporting excess energy generated during weekends. Its rainwater harvesting system also helps curb water use by up to 19% annually. 

In 2019, First Balfour was recognized as one of the top contractors of Light Rail Manila Corporation (LRMC) due to its excellent performance on the PhP980-million LRT Line 1 structural rehabilitation project. The company is the lone recipient under the Major Infrastructure Contracts category. Additionally, the Safety Organization of the Philippines, Inc. (SOPI) gave First Balfour an Award of Excellence for achieving over 8 Million Safe Man-Hours from August 29, 2017 to January 24, 2019.